Federal Court of Australia

Brauer v Coburn Resources Pty Ltd, in the matter of Strandline Resources Limited (Receivers and Managers Appointed) [2026] FCA 1110

ORDERS

THE COURT DECLARES THAT:

1.    For the purposes of Division 6 of Part 5.6 of the Corporations Act 2001 (Cth) (including s 556 and s 561), at all material times each of the 4th to 169th respondents was an employee of Strandline Resources Limited, and not of the first respondent.

THE COURT ORDERS THAT:

2.    The third respondent must pay the applicants’ costs of the proceeding, to be taxed if not agreed.

3.    Liberty to apply in relation to paragraph 2 before 4.00 pm AWST on 25 August 2026.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKSON J:

1    This proceeding concerns a single question: whether 166 persons (Employees) were employees of Strandline Resources Limited (SRL) or were employees of its wholly owned subsidiary, Coburn Resources Pty Ltd.

2    The question arises in an insolvency context. The applicants, Robert Brauer, Jason Preston and Linda Smith, are joint and several receivers and managers of SRL (Receivers). They are also receivers and managers of Coburn, which is also subject to a deed of company arrangement. The Commonwealth of Australia, as represented by the Department of Employment and Workplace Relations, pursues recovery of funds by way of subrogation to the accrued rights of the Employees. The nature of the securities that are in place for the benefit of lenders to SRL and Coburn, and the nature of the assets of the respective companies, means that if the Employees are employees of SRL, the Commonwealth’s claims will not take priority in any distribution of assets over secured claims of the lenders. However, if the Employees are employees of Coburn, the Commonwealth’s claims will have priority in respect of certain assets.

3    Hence, the protagonists are the Receivers who have been appointed by secured creditors, and the Commonwealth, which is the third respondent in the proceeding. The Receivers contend that the Employees were employees of SRL; the Commonwealth contends that they were employees of Coburn. Each of the Employees is named as a respondent to the proceeding, as is a company called Global Loan Agency Services Australia Nominees Pty Limited in its capacity as trustee for Coburn Security Trust and a company called Global Loan Agency Services Australia Pty Ltd. Those companies are joined as respondents in their capacity as parties to an intercreditor deed, but they took no active part in the proceeding. Nor did the Employees (save that some provided affidavit evidence). It is the Receivers and the Commonwealth who have joined issue.

4    For the following reasons, SRL was the true employer and the declaration sought by the Receivers will be made.

Factual background

5    The facts were largely undisputed. What was in dispute was how they are to be evaluated, as to which company was the true employer of the Employees. It is convenient to set out some undisputed background and procedural history here.

6    The focus of attention in the proceeding was on the Coburn Mineral Sands Project, a large mineral sands mining operation in the Gascoyne region of Western Australia that is the operation on which the Employees were working. Most worked on it exclusively, although some also fulfilled head office functions. But it will also be necessary to refer to other activities of SRL, as the case for the Receivers rests in part on the proposition that there was an ‘intelligible business objective’ (a term that comes from the authorities canvassed below) for SRL to be the employer of the Employees. That ‘intelligible business objective’, the Receivers say, was that SRL, as the holding company of the corporate group, needed the flexibility to assign employees to different projects in the group.

7    SRL was previously called Gunson Resources Limited. It was listed on the Australian Stock Exchange (ASX) in May 2000. At that time, it operated mineral exploration projects in Australia. One of those was the Project. Exploration activities at the Project site were initiated in 2000.

8    In the years following the initial listing, certain other projects operated by Gunson Resources Limited were discontinued, and others were commenced but, as at July 2013 the company still operated the Project. In that month, a subsidiary called Strandline Australia Pty Ltd was incorporated in order to develop the Project.

9    In October 2014, Gunson Resources Limited acquired a different company, Strandline Resources Pty Ltd. This was a private company with mineral sands exploration assets in Tanzania. In December 2014, Gunson Resources Limited changed its name to Strandline Resources Limited (i.e. SRL). This, along with the acquisition of another Tanzanian-focussed resources company in October 2015, was explained in SRL’s 2015 Annual Report as reflecting a change in strategy to focus on exploration and evaluation of mineral sands projects in Tanzania. The Annual Report went on to say that the group was ‘continuing with its strategy to secure a strategic investor to realise value for the Coburn Heavy Mineral Sands Project’.

10    In 2019, Strandline Resources Pty Ltd changed its name to Coburn Resources Pty Ltd (i.e. Coburn). It is unclear exactly when operation of the Project passed completely from SRL to Coburn. In August 2020, the mining tenements used by the Project were transferred from SRL to Coburn. In April 2021, the pastoral lease for the Project site, initially registered in the name of SRL in 2015, was transferred to Coburn. According to an affidavit of Mr Brauer affirmed on 28 August 2025, Coburn entered into a Preferred Heritage Agreement with the Yamataji Marlpa Aboriginal Corporation in March 2022, but in June 2022 each of Coburn and SRL entered into a separate mining agreement with the Nanda Aboriginal Corporation. Different offtake agreements with product purchasers named either Coburn or SRL as the supplier between 2020 and 2021.

11    In June 2020, the Commonwealth Government’s Northern Australian Infrastructure Facility (NAIF) announced that it would provide debt finance of up to $150 million to Coburn for the development of the Project (all dollars in this judgment are Australian unless otherwise specified, although ‘AU$’ will be used where necessary to avoid confusion).

12    By the time of issue of SRL’s 2021 Annual Report, some $338 million of funding for the Project had been secured. This was comprised of senior secured debt facilities, being the NAIF facility and a bond facility of US$60 million, each of which SRL guaranteed. Also, in April 2021 SRL completed a $122 million equity raising and advanced those funds to Coburn by way of a loan.

13    28 April 2021 is a date worth noting here. It is the date on which the first of the Employees was hired. It was common ground that this was the commencement of the relevant period, in relation to which the true employer of the Employees needs to be identified.

14    It is also worth mentioning here that each of the Employees had a written employment contract, each naming SRL as the employer. As set out below, however, the Commonwealth maintains that agency principles, alternatively an equitable principle about taking the benefit and burden of covenants, mean that Coburn was the true employer.

15    In December 2021, a subsidiary of SRL announced an agreement with the government of Tanzania under which, essentially, a further subsidiary of that subsidiary would be formed to pursue a mineral sands project in Tanzania, with the Tanzanian government holding a 16% minority interest.

16    In the 2022 financial year, Coburn had commenced drawdowns on the senior secured debt facilities, of approximately AU$114 million and US$52.2 million. That left about AU$50 million to draw down. In its 2022 Annual Report, SRL reported a further capital raising of approximately AU$50 million during the June quarter, saying that these proceeds were to be used primarily to progress two ‘Tanzanian growth projects … while in parallel advancing scoping study evaluation and approvals for the potential expansion of the Coburn project’.

17    The Project commenced commercial production in November 2022. In that financial year, SRL advanced a scoping study on the potential to increase production by up to 50%. Also in the financial year ending 30 June (FYE) 2022, Coburn completed the final drawdown of the senior secured debt facilities and obtained a $15 million working capital 12-month revolving cash facility from the National Australia Bank, which SRL guaranteed.

18    By this point, the senior executive team that was in place included Head of Commercial and Strategic Developments, Belinda Murray, and General Counsel and Head of Risk and Compliance and Joint Company Secretary, Jamie Cann. In SRL’s 2023 Annual Report the appointments of Ms Murray and Mr Cann were said to be part of strengthening the executive team in order to ‘support the growth and the ramp-up at the Coburn project’. The Annual Report also announced the appointment of Jozsef Patarica as Chief Executive Officer in July of 2023, describing his knowledge of the mineral sands industry as ‘immensely valuable’ to SRL as it ‘unlocked’ its ‘portfolio of assets’.

19    In August 2023, SRL raised further equity capital of approximately $36.6 million. The stated purpose of this was to ‘support continued ramp-up at Coburn towards steady-state production and accelerate its various growth initiatives’.

20    However, on 27 October 2023, SRL requested a trading halt with ASX. This is attributed in the Receivers’ written submissions to ‘operational challenges’ encountered by the Project, which are said to have required a restructure of Coburn’s finances. On 21 December 2023, the Strandline group announced that it had entered into a standstill agreement with its financiers.

21    In August 2024, Tanzanian assets were sold for approximately $43 million. The proceeds were used to repay $35 million in ‘super senior’ debt facilities, which included a $15 million tranche of the NAIF facility and a $20 million bond facility. The letter from the non-executive Chair published in the 2024 Annual Report said that this would enable SRL to ‘focus on delivering the best possible outcomes at Coburn’.

22    On 21 February 2025, the Receivers were appointed as joint and several receivers of SRL and of Coburn. On the same day, each of SRL and Coburn went into voluntary administration. At that time, the directors of SRL were Mr Patarica along with John Hodder and Mark Hancock (who was non-executive Chair). The only director of Coburn was Mr Patarica.

23    Following their appointment, the Receivers conducted a sales process for the assets and undertakings of Coburn and SRL respectively, which resulted in the selection of a preferred bidder and negotiation of the terms of a deed of company arrangement in respect of Coburn. The second meeting of Coburn’s creditors in the administration approved this. SRL, however, went into liquidation.

24    On 22 August 2025, the Coburn deed of company arrangement was executed. It resulted in the payment to the Receivers of an amount representing the estimated unpaid claims of creditors who would have been entitled to be paid in priority under s 433 and ss 556(1)(e), (g) or (h) of the Corporations Act 2001 (Cth), had the company gone into liquidation. The Receivers hold that amount on trust pending the outcome of this proceeding.

Witnesses

25    The witness evidence was led exclusively by affidavit, save for a relatively brief and uncontentious cross examination of the Receiver who appears to have the main conduct of the matter, Mr Brauer. Mr Brauer gave his oral evidence in a straightforward and meticulous way, and I accept that his evidence was truthful and reliable. The evidence of the other witnesses was not subject to any challenge, and I accept that it too was truthful.

Principles as to identifying the true employer

26    It will be convenient to commence with the main area of controversy between the parties: which of the two candidates was the true employer of the Employees. The Commonwealth’s alternative argument, said to be based on an equitable principle about taking the benefit and burden of contracts, will be addressed further below.

27    The question of which company is the true employer of a person or persons has arisen in a number of different contexts, with insolvency being one of the most common. The principles by which the question is to be answered are well established and were not in dispute.

28    The courts are entitled to consider the reality of purported contractual arrangements, even where it is not alleged that those arrangements are a sham: Pitcher v Langford (1991) 23 NSWLR 142 at 161. At 161-162, quoting from Ex parte Robert John Pty Ltd; Re Fostars Shoes Pty Ltd [1963] SR (NSW) 260, Handley JA held that answering the question was a matter of finding the ‘true relationship’ of the parties.

29    The courts have taken a wide view of the putative employment relationship, to ascertain ‘the reality of the situation’: Gothard, in the matter of AFG Pty Limited (Receivers and Managers appointed) (in liq) v Davey [2010] FCA 1163 at [52] (Edmonds J). Another formulation, which has been endorsed at intermediate appellate level, is the ‘substance and totality of the relationship’: Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Limited (in liq) [2023] NSWCA 118; (2023) 11 NSWLR 446 at [165] (Gleeson JA, White and Brereton JJA agreeing). Thus, it is permissible to look beyond the employment contract to decide as a matter of fact who the real employer is and to whom obligations are owed: Sturesteps v McGrath [2010] NSWSC 169 at [19]. Since the question is ultimately that of the identity of the relevant contracting party, evidence of conduct post-dating the formation of an employment contract can be relevant: Damien v JKAM Investments Pty Ltd [2015] NSWCA 368 at [28] (Tobias AJA, Gleeson and Simpson JJA agreeing).

30    In Re C & T Grinter Transport Services Pty Ltd (in liq) [2004] FCA 1148 at [20] Finn J relevantly held (citations omitted) that:

...

(2)     The totality of the circumstances surrounding the relationships of the various parties including conduct subsequent to the creation of an alleged employment relationship is relevant to the assessment to be made.

(3)     Documentation created by one or more of the parties describing or evidencing an apparent employment relationship will be relevant to, but not necessarily determinative of, the true character of that relationship. In determining the identity of a disputed employer, the Court is entitled to consider ‘the reality of purported contractual arrangements’. The documentation may have been brought into existence for other purposes, for example, tax minimisation or the reduction of insurance premiums, without reflecting the reality of the parties’ relationship.

…

See also Golden Plains Fodder Australia Pty Ltd v Millard [2007] SASC 391; (2007) 99 SASR 461, where at [35] Gray J (David J agreeing) observed that the ‘payment of wages by a particular entity is not conclusive of the existence of an employment relationship’.

31    It is thus possible to find that a purported contracting party was not in reality party to the employment contract, even where a written contract gives it as the party: Shaw v Bindaree Beef Pty Ltd [2007] NSWCA 125 at [59] (Giles JA, Spigelman CJ agreeing).

32    There is a line of decisions commencing with WorkPac Pty Ltd v Rossato [2021] HCA 23; (2021) 271 CLR 456, and relevantly including Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 275 CLR 165, in which, broadly speaking, the High Court has emphasised the importance of looking to the contractual terms in order to characterise certain relationships in the employment context. But these decisions are distinguishable and do not affect the principles under consideration here: see Re Spitfire Corporation Limited (in liq) [2022] NSWSC 340 at [76]; upheld on appeal in Resilient at [162]. The High Court has not overruled Pitcher v Langford or Bindaree Beef, expressly or by implication: Resilient at [163]; see also Agrigrain Pty Ltd v Rindfleish [2024] NSWCA 295 at [35]-[36] (Kirk JA, Ward P and Stern JA agreeing); although see Robinson v BMF Pty Ltd (in liq) (No 2) [2022] FCA 1191 at [180]-[192] (Mortimer J).

33    That said, written employment agreements are significant: Spitfire at [66]. In Dalgety Farmers Ltd (t/as Grazcos) v Bruce (1995) 12 NSWCCR 36 at 47, Kirby ACJ (with whom Clarke and Cole JJA agreed) observed that the ‘paper arrangements [are] not irrelevant, and should not be ignored’. In Agrigrain, Kirk JA gave a useful reminder, with respect, of the importance of contractual principles in this context:

37    In Personnel Contracting Kiefel CJ, Keane and Edelman JJ made the point that in characterising a relationship as employment or contractor it was still permissible to consider the totality of the relationship between the parties (at [61]). But that had to be on the understanding that ‘for a matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties’ contract, and not simply an aspect of how the parties’ relationship has come to play out in practice’ (ibid). A similar point applies here. There is some danger in using language such as having to assess the ‘totality of the relationship between the parties’, as though that were the legal test, without keeping a steady eye on the fact that the issue in the ‘true employer’ cases is one of contract law, and that any assistance from the characterisation cases is analogical and must also take account of the law on that topic as it now stands.

38     If there was at the relevant time an extant written employment contract, which is not alleged to be a sham, or invalid for some other reason, or to have been overtaken by a subsequent contract, or to have in fact been made for an undisclosed principal, or such like, then the answer to the true employer will readily be found in the document.

39     If the contract was not wholly written then it is permissible to refer to post-contractual conduct. Care should be taken to avoid a ‘roaming inquiry beyond the contract’ except to the extent permitted by contract law principles (quoting Personnel Contracting at [188] per Gordon J). In this context, as in the context considered in Workpac, ‘it is the function of the courts to enforce legal obligations, not to act as an industrial arbiter’ (Workpac at [62]) …

34    Hence, as will be seen below, the primary case for the Commonwealth does not seek somehow to contradict the plain terms of the formal written employment contracts expressed to be between SRL and the Employees. Rather, the Commonwealth seeks to go behind the contracts, in a sense, by means of the law of agency.

35    Beyond the general principles just outlined, the results in the various cases tend to turn on their own facts: Gothard at [52]. But in Gothard at [60] Edmonds J noted aspects of ‘the practical realities of the relationship’ that had been considered relevant as including which entity:

(a)    had practical and legal control and direction of the employees;

(b)    made decisions about hiring;

(c)    made decisions about disciplinary issues;

(d)    made decisions about the level of remuneration;

(e)    actually paid remuneration;

(f)    communicated with employees about leave;

(g)    made decisions about termination of employment.

36    Another (overlapping) list of matters that can be relevant to the question of identity of the true employer, given in Spitfire at [70] is (citations removed):

which company that paid the employees’ remuneration; whether the employer of record had assets or revenue from which it could meet employees’ entitlements; whether the employer of record had any purpose other than to be an employer of record; and whether the employer of record exercised practical and legal control and direction over the employees, although this will be given limited weight where the putative employers are part of the same corporate group[.]

37    I have mentioned the concept of the ‘intelligible business objective’ already. Both the Receivers and the Commonwealth put weight on it. It comes originally from the judgment of Buchanan J in Fair Work Ombudsman v Ramsey Food Processing Pty Ltd [2011] FCA 1176; (2011) 198 FCR 174. It is worth setting the relevant passage out in full to explain the relevance of the concept in this context:

76    There may be many reasons why companies, businesses or enterprises associated with each other might wish to organise their affairs in a way where one legal personality employs labour for the ultimate use and benefit of other legal personalities. Such arrangements will often not be characterised or accompanied by the apparent profitability or identified reward which might be necessary in order to regard an arm’s-length arrangement as a genuine one.

77    In such intra-group arrangements there may be overlapping, or even common, directorships, interlocking shareholdings (either cross-ownership or through ultimate ownership) and there is frequently a system of cross-guarantees in place. Little of this may be apparent to outsiders. The details may not be discoverable through the public records system. Arrangements between or amongst companies related in this way where one company (or more) operates to engage labour while others are concerned with management, operations, marketing or sales are by no means unusual. They are certainly not illegal. Arrangements along these lines may even be indispensable for some forms of business activity, eg joint ventures. Although more than mere lip service must be paid to the separation of legal personality provided by individual incorporation, the tests applied to other labour hire arrangements, of independence and separate business, are either not relevant or are much less readily applied in such a circumstance.

78    Nevertheless, it must be possible to identify a rational explanation for the arrangement and the explanation must be satisfactorily related to an intelligible business objective. That is so because otherwise, doctrines of agency, at least, may operate to defeat a bare claim of independence and isolated liability, supported only by a bare reference to separate incorporation. That is particularly likely to be the case when: the separate employing company is completely reliant upon a company to which it purportedly supplies labour; it has no assets and no management structure of its own; and it exists only as a corporate shell to protect another company, which does have assets, from liability to employees. In such a case a court might not hesitate long before pronouncing the arrangement ineffective or, in a more serious case, a sham.

38    The relevance of identifying an intelligible business objective for the place and role of the putative employer entity in a given corporate group has been endorsed subsequently, in particular in a number of decisions of Black J of the Supreme Court of New South Wales: Re Branded Media Holdings Pty Limited (in liq) [2020] NSWSC 557 at [26]; Spitfire at [70]-[71] and [85]; and Re Mosaic Brands Limited (admins apptd) (recs and mgrs apptd) [2025] NSWSC 959 at [30]-[31] and [38].

The Receivers’ case

39    The proceeding is an application by the Receivers for a declaration that each of the Employees was an employee of SRL and not of Coburn for the purposes of s 556 and s 561 of the Corporations Act and ‘at least for the purposes of Pt 5.6 Div 6’ of the Act. The provisions cited concern the proof and ranking of claims in a winding up. As applicants, the Receivers put their case first.

40    That case was that, on the basis of the matters about to be mentioned, the Court should infer that at all material times SRL was the sole employer entity within the Strandline group (Receivers’ written submissions para 13):

for the intelligible business purpose of employees being retained for the benefit of the group generally, rather than Coburn alone, and therefore [being] able to be deployed as necessary throughout Strandline’s operations, whatever those may be (bearing in mind that at various points in time, they extended across Australia and internationally).

The matters on which the Receivers rely

41    The matters on which the Receivers relied to support that inference were as follows.

42    Coburn was a subsidiary of SRL. SRL held 100% of the issued shares in Coburn, and exercised control over Coburn because Coburn’s sole director was SRL’s Managing Director and later CEO, Mr Patarica.

43    The employment contracts all identified SRL as the employer. Each of the Employees was party to a written employment contract. For each of those contracts, the named employer and counterparty to the Employee was SRL. It will be necessary to refer to other aspects of the employment contracts below, including specific provisions and examples, but that broad point was not in dispute (albeit its significance was). Conversely, none of the employment contracts named Coburn as a party or purported to confer on it any rights or obligations. There is, however, specific mention of Coburn as a potential transferee or assignee of the employment in a particular provision which is addressed below.

44    The right to reassign. 165 of the 166 employment contracts contained a clause that gave SRL the right to require the Employee to perform services for related bodies corporate or clients of the employer (the only one that does not is the contract of SRL’s CFO, Robert Ierace). The Receivers say that this is consistent with the business objective to which they point, namely that it makes sense for SRL as the ultimate holding company to employ the Employees because that gave it the flexibility to assign them where needed in the various operations of the Strandline group.

45    Pay, leave, superannuation, insurance. Employees received their pay from a bank account in SRL’s name. Payslips were issued by SRL, on SRL letterhead (that is, bearing SRL branding and the name ‘Strandline Resources Limited’). Wages, leave, superannuation and other entitlements of Employees were all recorded as liabilities on SRL’s balance sheet. SRL was invoiced for workers’ compensation premiums by its insurance broker, and the Receivers have identified examples where the premiums were paid out of SRL bank accounts, albeit they were not able to confirm categorically that this happened with every premium.

46    Tax. SRL was the head of the tax consolidated group. It paid payroll tax and PAYG amounts from its bank account.

47    Policies and procedures. Policies and procedures governing the employment relationship were binding under the employment contracts. Some of these were produced under SRL’s name and branding; that is, ‘Strandline Resources Limited’ was named as the apparent owner or creator of the policy document, and its branding (which again used its full name) appeared on the document (on each page). One example in evidence just referred to ‘Strandline’ rather than the company’s full name. Other examples, however, were named as having been produced by Coburn, that is, ‘Coburn Resources Pty Ltd’. I will consider these further below.

48    Performance management, human resources and incentives. Other routine aspects of managing the employment relationship appear to have fallen to SRL. Employee performance feedback was provided on ‘Strandline’ branded forms. Examples of email correspondence were in evidence about matters such as employee induction and promotion. These were conducted from the address Strandline HR and had SRL’s Perth head office address and ‘Strandline’ branding in the signature blocks. Some Employees participated in incentive plans that involved shares in SRL and had been approved at the SRL corporate level. Communications with employees about these plans were on SRL letterhead. Bonus payments were made on the recommendation of SRL’s Remuneration Committee.

The group’s funding arrangements

49    The Receivers acknowledge another relevant aspect of the arrangements within the Strandline group: SRL did not generate its own revenue. Hence, it depended on other sources of funds to pay the employment costs mentioned above from its own bank accounts.

50    Those sources potentially included external equity and debt capital. As is outlined above, SRL played a central part in the raising of such capital, not least because it was the entity listed on the ASX. It conducted the equity capital raisings itself, and advanced funds so raised to Coburn in respect of the Project. As for debt finance, it appears (as outlined above) that Coburn was the principal debtor for the senior secured facilities obtained to fund the Project, where SRL acted as guarantor and provided security for the facilities.

51    Another potential source of funding for SRL to meet employment costs was Coburn. As at the date of the appointment of the Receivers, Coburn owed SRL approximately $207 million. The loan was never formally documented. A significant component of the intercompany indebtedness reflects the advances from SRL to Coburn of funds raised by way of equity capital, as described above.

52    There is evidence of accounting records covering the relevant period which indicate that the following kinds of transactions also altered the intercompany loan balance:

(a)    SRL would receive funds from Coburn to apply to payroll, approximately $1.5 million to $2 million per month, which would result in a decrease in Coburn’s intercompany indebtedness to SRL;

(b)    payroll costs for workers at the Project were paid from funds of SRL, which would result in charges to Coburn that would increase its indebtedness to SRL;

(c)    SRL would raise charges (recorded in intercompany accounts) to Coburn for corporate overhead expenses approximating $250,000 per month, which would also lead to increases in Coburn’s indebtedness to SRL; and

(d)    insurance premiums in relation to the operations of the Project, including workers’ compensation premiums, were paid by SRL and charged to Coburn, and so increased Coburn’s indebtedness to SRL.

The Commonwealth’s primary case

53    The Commonwealth divides the Employees into 141 Site Employees and 25 Perth Employees. The Site Employees are defined by reference to an affidavit of Robert James Stevenson affirmed on 19 November 2025. Mr Stevenson was first engaged as the Operations Manager for the Project in May 2023, and became Acting General Manager for the Project in February 2024 and General Manager in March 2024. He was in that role at the time that the companies went into administration and receivership.

54    The Commonwealth defines the Site Employees by reference to a chart annexed to Mr Stevenson’s affidavit, which describes them as the employees who were ‘on the Project’ and Mr Stevenson says that he had direct or indirect supervision of each Site Employee. His affidavit says that he does not believe that those Employees ever carried out any work for SRL or Coburn, other than work for the Project. The Perth Employees are evidently those Employees who are not Site Employees. It would appear (and was not in dispute) that they predominantly worked at the head office in Perth.

55    The Commonwealth describes its primary case as resting on orthodox agency principles. In that respect it relies in particular on Resilient which, as the Commonwealth says, was decided on the basis that the putative employer was contracting as agent for the true employer as undisclosed principal. So, here, the Commonwealth submits that while SRL is identified as the employer in each of the employment contracts, in truth it was contracting with the Employees as agent for Coburn as undisclosed principal. Hence Coburn was the true employer.

56    In that respect the Commonwealth accepts that the question of the true employer must be determined as at the time the contract of employment was formed (see Resilient at [171]), but it says that post contractual conduct can be relevant to determining the identity of the contracting party. I have already made the latter point above.

57    The Commonwealth places particular weight on what it says is the need for an intelligible business objective for the relevant arrangements. Citing Ramsey Food at [78] and Branded Media at [26], it submits that:

There is unlikely to be an intelligible business objective where the separate employing company in a group is completely reliant on the company to which it supplies labour, does not charge for the labour which it supplies, [and] is at all times incapable of meeting its obligations to employees.

58    The Commonwealth relies in particular on the following matters.

59    Financial arrangements. The Commonwealth submits that Coburn ultimately bore the financial burden of the employment of all Employees. It says (perhaps inconsistently with the implication in its submission quoted above) that the salaries and other entitlements of the Site Employees were recharged to Coburn. At the same time, it points out that there is no evidence of an arrangement such as a management services agreement that would permit SRL to receive payment for the service of making its Employees available to Coburn. The evidence on which the Commonwealth relies in this regard will be addressed when I come to consider the funding arrangement below.

60    The Commonwealth appears to implicitly acknowledge that employee costs for Perth Employees were not charged to Coburn. However, it submits that ‘as a matter of practicality, other than where funds were available from the lenders (or the sale of the Tanzanian assets) Coburn funded all employee entitlements … by paying [SRL] lump-sum amounts when those liabilities fell due’ (emphasis in original).

61    Site employees. The Commonwealth submits that Coburn should be found to be the true employer of the Site Employees on orthodox agency principles. It submits that the Site Employees were employed expressly to work on the Project, and provided their services exclusively or ‘close to exclusively’ for it. It relies on Mr Stevenson’s affidavit in this regard, including his belief, as already mentioned, that the Site Employees only worked on the Project. Further relevant evidence from Mr Stevenson’s affidavit will be described below. To a significant extent, the Commonwealth’s case about the Site Employees relied on the proposition that Mr Stevenson was an employee of Coburn which therefore, through him, controlled all the other Site Employees.

62    Perth Employees. While employment costs associated with the Perth Employees were not recharged to Coburn, the Commonwealth says that the only source of funds available to SRL were funds from Coburn so that ‘in practice, it was Coburn’s funds which were used to pay all of these employees’ salaries’. The Commonwealth relies on an affidavit affirmed by Pascal van Dalen in that regard.

63    Mr van Dalen was Senior Management Accountant – Operations for the Project from July 2024. It appears that the basis of the Commonwealth’s submission is simply that by the time he joined the business, in July 2024, the only source of external funds for the group was trading revenue from the Project, which was earned by Coburn, and funds provided by the ‘lender group’. Mr van Dalen dates that state of affairs from October 2023, when the ASX suspension foreclosed any ability by SRL to raise equity capital. The ‘lender group’ is not described with any precision in Mr van Dalen’s affidavit, but I infer that it at least includes the senior lenders mentioned above. The Commonwealth’s submissions acknowledge a qualification to this evidence, which is that SRL received the proceeds of the sale of the Tanzanian assets in August 2024, of approximately $43 million.

64    The Commonwealth also acknowledges that some of the Perth Employees had some involvement with the Tanzanian assets, or had the potential for that involvement. This acknowledgment comes from an affidavit of Mr Patarica, which names a very small number of head office staff (three, including the company chair, who was not an Employee) as having worked in relation to the sale of the Tanzanian assets.

On the face of things, SRL was the employer

65    The matters set out above under the heading ‘The matters on which the Receivers rely’ all point to SRL as the employer. On the face of things, they combine to point clearly in that direction. The arrangements with Employees were formally documented. There was a written employment contract for each, and for each SRL was unambiguously named as the employer. The contracts specified the location of employment as being either Perth or the Project. Each contract gave SRL the right to assign the Employee to work for a different subsidiary. There is no suggestion that any of this was a sham.

66    Consistently with the terms of the contracts, the Employees’ wages were all paid by SRL. That was not just an accounting entry; the cash came out of SRL’s bank accounts. The same may be said of other employee benefits and employment related costs. It may also be said of the PAYG contributions that were paid to the Australian Taxation Office, effectively on behalf of the Employees. The significance of the funding arrangements that permitted SRL to pay these amounts will be considered below, but that SRL did pay them, in fact, should not be overlooked.

67    With one qualification, all the written procedures and other employment related documentation also indicate that the employer was SRL.

68    The qualification is that there were three policy documents in evidence that were named as having been produced by Coburn: ‘Coburn Mineral Sands Village Rules’; ‘Health and Safety Management Plan – Operations’; and ‘Principal Mining Hazard Management Plan’. But the Receivers submit, and I accept, that this is explicable on the basis that those documents deal with matters specific to personnel working on the site of the Project, which included the employees of third-party contractors. They do not provide any persuasive reason to treat the other policy and procedure documents as anything other than evidence that SRL was the employer.

69    The Commonwealth’s submissions make only one point by way of direct contradiction to all this. That point concerns the clauses in the overwhelming majority of the employment contracts that permit SRL to assign Employees to different subsidiaries.

70    An example of such a clause is:

The Employee agrees the Employer may, from time to time, require the Employee to perform services for the Employer’s Related Bodies Corporate and/or their respective clients and the duties in clause 7 above shall apply equally to the performance of such services.

Clause 7 contains a generally expressed and unremarkable list of standard employee duties.

71    Also, while the employment contracts specified either the Perth head office or the Project as the place of work, they typically permitted the employer to require the Employee to work ‘at such other locations as the performance of their duties and the business of the Employer may reasonably require’.

72    Finally, most of the employment contracts also contained a provision, found in the description of the employer in a schedule, as follows:

Note, this Agreement may be transferred and assigned to a Strandline subsidiary company during project implementation (e.g. Coburn Resources Pty Limited) at the discretion of the Employer and all accrued entitlements will transfer accordingly.

73    The Commonwealth submits that the Court should put no weight on these clauses, because none of the Site Employees was in fact assigned to the activities of any company other than Coburn, or to any project other than the Project, and there is no evidence that the employment contracts were ever assigned. But that is not a complete answer to the significance of these reassignment clauses (and it is not raised as an answer at all in relation to the Perth Employees). As will be seen, I consider the last quoted clause to be particularly significant. And, more broadly, SRL had the contractual right to assign the Employees to a different subsidiary. Whether this was hollow right or not, that is, whether it has weight in the evaluative exercise, depends on whether there was an intelligible business objective for the arrangements, a question to which I will return below.

Was Coburn nevertheless the undisclosed principal in each of the employment contracts?

74    The evidence just canvassed, as far as it goes, focusses attention on why the Court should conclude that Coburn was the true employer, despite the terms of almost all the employment-related documents, and despite SRL’s payment in fact of employee entitlements and employment related costs.

75    The reasons the Commonwealth gives are all squarely based on the proposition that, in the case of each Employee, SRL was contracting as agent for Coburn, even though nowhere was Coburn identified as the principal. In other words, it was the undisclosed principal.

76    As anomalous as the doctrine of undisclosed principal may be, and as mysterious as its name might sound, it rests on the simple proposition that, under English and Australian law, it is not necessary for a contractual counterparty to be aware that a person is contracting in the capacity as agent for another person. Evidence is admissible to show who is the real principal in order for that person to sue or be sued upon the contract. But that does not change the essential requirement that the agent was actually authorised to contract on the principal’s behalf (given that the counterparty is ignorant that the agent is contracting on behalf of a principal, ostensible authority cannot apply): see Siu Yin Kwan v Eastern Insurance Company Ltd [1994] 2 AC 199 at 207; Commissioner of State Revenue v Viewbank Properties Pty Ltd [2004] VSC 127 at [46] (Nettle J).

77    It is necessary to bear in mind that here, the Commonwealth points to no evidence of express authority conferred by Coburn on SRL. Its case is that the authority should be inferred in all the circumstances. Also, as the Commonwealth accepts, the authority needed to exist at the time of the making of each employment contract; the doctrine of ratification has no place when the principal is undisclosed: Resilient at [171].

78    All this has a bearing on the nature of the Court’s task; the Court is not simply undertaking an evaluation at large as to whether all relevant circumstances, taken together, indicate that Coburn (or SRL) is the ‘true employer’: see the excerpt from Agrigrain at [33] above. The Court is answering a more specific question: on all the relevant evidence, should it be inferred that SRL was, in truth, contracting as agent for Coburn as principal? It almost goes without saying that this question must be answered on the basis of the objective circumstances revealed by the evidence, not any person’s subjective beliefs: see e.g. Garnac Grain Co Incorporated v HMF Faure & Fairclough Ltd [1968] AC 1130 at 1137 (Lord Pearson); and see Agrigrain at [34] and [40]. To the extent that the authorities say that the beliefs of employees are to be given weight (e.g. Grinter at [20(4)]), that cannot be reconciled with the agency basis on which the Commonwealth puts its primary case here.

79    By way of a final parameter confining the Court’s inquiry, neither the Receivers nor the Commonwealth relied on any evidence of specific circumstances surrounding the commencement of a given Employee’s employment to submit that in the case of that Employee, SRL was or was not contracting as agent for Coburn as undisclosed principal. That is, with the possible exception of the division of the Employees into Site Employees and Perth Employees, both active parties proceeded on the basis that the evidence was to be assessed overall, so that the conclusion reached would hold good for all Employees, regardless of the individual circumstances in which they came to be employed.

80    On that basis, I will consider the evidence under four headings: funding arrangements; control; terms of the employment agreements; and intelligible business objective.

Funding arrangements

81    The Commonwealth’s overall submission is that Coburn ‘ultimately bore the financial burden of the employment of all [Employees]’ and that, even in the case of Perth Employees, ‘as a matter of practicality, other than where funds were available from the lenders (or the sale of the Tanzanian assets) Coburn funded all employee entitlements’ (emphasis in original).

82    With respect, the proposition that Coburn ultimately bore the financial burden of the employment of all Employees is at too high a level of generality to be useful. Nor is it demonstrably true. The qualifications to the proposition that the Commonwealth acknowledges are hardly trivial. In relation to funds from lenders, while Coburn appears to have been the principal debtor for the $338 million of funding for the Project, SRL stood as guarantor and provided security for the senior secured facilities. Coburn had no role in the $43 million that SRL raised from the sale of Tanzanian assets in August 2024. Also, it will be recalled that in April 2021, SRL raised $122 million in equity capital, and further amounts in 2022 and 2023.

83    As has been said, April 2021 is the same time as the commencement of the employment of the first of the Employees and the start of the relevant period. From that time on, it is impossible to identify a particular source for the money that went to pay that person and her subsequent co-workers, let alone to attribute that source exclusively to Coburn. Senior counsel for the Commonwealth submitted that the equity capital raised was earmarked in public announcements for capital expenditure, not operating expenditure. But the announcements also referred to working capital, and no attempt was made by the Commonwealth to establish that all the Employees were working on production only, as distinct from the capital development works that one would expect to see for a project that was under development and only reached first production in November 2022. Up to August 2023, SRL was raising equity to ramp up production and pursue growth of the Project (see [19] above). It can be inferred that many of the Employees were working in those activities.

84    Mr Brauer accepted in cross examination that during the period 1 July 2023 to 31 January 2025, the only money available to SRL to pay its employees came from cash generated by the Project, and GST receipts and fuel tax rebates received by SRL. But some 50 of the Employees were employed before the start of that period. And Coburn was earning that cash through the use of assets acquired or developed using capital advanced, in part, by SRL. Also, while the GST receipts were attributable to expenses paid on the Project by Coburn, Mr Brauer said, in effect, that SRL received those receipts because it performed a treasury function.

85    In other words, and as one would expect with a conventionally managed publicly listed corporate group as the Strandline group evidently was, the money came from a number of places. Examined at this level of generality, the Commonwealth’s proposition provides no support for the inference of agency it asks the Court to draw.

86    If the issue is examined at the more specific level of the intercompany accounting arrangements, the picture becomes no clearer. The equity capital raised by SRL appears to have been advanced to Coburn by way of a loan. This did not have formal documentation; as is common in corporate groups, it was done by accounting entries. But the result was a substantial liability to SRL in the standalone accounts of Coburn. It follows that the payments made by Coburn to SRL that were used by SRL to defray employment expenses are explicable, not by SRL acting as agent for Coburn, but by Coburn reducing its liability to SRL.

87    Consistently with that, and as summarised at [52] above, when cash was transferred from bank accounts of Coburn to bank accounts of SRL for the purpose of paying wages, it was recorded as a reduction in the amount of that intercompany loan balance. Other amounts paid by SRL in respect of employee entitlements or workers compensation insurance were charged to Coburn in the intercompany accounts, thus increasing its indebtedness to SRL. A monthly charge for head office expenses also resulted in an increase in Coburn’s indebtedness to SRL. To repeat: nobody suggests that these arrangements were a sham.

88    The following passage from the cross examination of Mr Brauer is relevant (ts 19):

MR DE KERLOY: Well, Coburn did pay voluntarily the 1.5 to 2 million to be used to ensure that the workers were paid?---It was – it – it obviously recorded the expenses that related to its project, including the wages of the people that worked there. And then, as and when it had funds, it was prepared to send some to Strandline as part of a treasury arrangement, such that - - -

To pay the wages bill?--- - - - there was enough cash in Strandline to pay the wages. The wages bill. And - - -

HIS HONOUR: Sorry. As part of a what arrangement, did you say?---It’s like a treasury arrangement.

Treasury arrangement?---Yes. So really just the movement of money across the entities.

MR DE KERLOY: But that movement had a very specific reason, didn’t it, and that was to pay the employees?---Yes.

89    This confirms the practical reality that in corporate groups, funds flow between different entities to meet their various financial needs. And it can be inferred that one purpose of the accounting practices linked to the flow of funds is to ensure that, as far as practicable, the entity for whose benefit the work is done is recorded in the accounts as bearing the cost of the work. In the accounting records, the employee costs in relation to work done on the Project were expensed to the Project. But it does not follow from this that the legal liability to pay the Employees should be inferred to have rested with Coburn, and not with SRL, so that Coburn is in the position of undisclosed principal. In any event, the costs of employment of the Perth Employees were not charged to Coburn, except perhaps indirectly by way of the $250,000 corporate overhead charge.

90    Further, accrued employee entitlements were recorded as liabilities in the accounts of SRL. That tends to confirm that it was the entity liable for those entitlements, not Coburn. If SRL charged Coburn when the entitlements were paid that is, once again, explicable by an intention to allocate costs to the entity that was likely to earn revenue from the work of the Employees.

91    To the extent that the authorities suggest that the true employer needs assets to draw on to pay the employees, these arrangements show that SRL did have such an asset: the intercompany loan. The intuitive reaction that this is not a ‘real asset’, because it is owed by a subsidiary group company, does not advance the analysis (and I do not suggest that the Commonwealth puts it that way). There would be an inconsistency in treating Coburn as a separate legal entity capable of having a principal and agent relationship with SRL, and at the same time treating the loan between those two entities as though it can be disregarded as not a ‘real’ legal obligation.

92    Finally, it must also be observed that the figure of approximately $207 million indebtedness of Coburn to SRL is at FYE 2025, that is, when the Receivers were appointed. There is a table in Mr Brauer’s second affidavit which shows that Coburn’s indebtedness to SRL grew over time, from approximately $14.6 million as at 30 June 2021 to approximately $137.9 million as at 30 June 2023 to $206,998,000 as at 30 June 2025. This suggests that during the period in which the Employees were employed, the net flow of funds was from SRL to Coburn, not the other way around.

93    In all the circumstances, I do not find that SRL was financially dependent on Coburn to pay Employees. The true arrangements were more complex, emerging from practices and structures consistent with the Strandline group’s position as a publicly listed corporate group.

Control

94    Many of the indicia set out at [35]-[36] above concern which entity controls the employment of the relevant employees. But as said in Spitfire, less weight will be given to the question of control when the companies are members of a corporate group: see too Branded Media at [31].

95    In this case, it has not been explained how control is relevant to the Commonwealth’s primary case. In these circumstances, at least, the issue of control presents a degree of circularity; if all the Employees are employees of Coburn, then those who exercised control over the employment of their colleagues were doing so as representatives of Coburn – but that, of course, requires reaching the conclusion that those senior employees are employees of Coburn.

96    The Commonwealth placed a degree of emphasis on Mr Stevenson’s evidence to the effect that all the Site Employees were under his direction and control when he was Acting General Manager and then General Manager for the Project. But that only exposes the circularity, because it begs the question of who controlled Mr Stevenson in that role. His evidence does not say, although he does annex two letters successively confirming his appointment in those two roles. These are on SRL letterheads, and each signed by Ms Murray in her capacity as Chief Operating Officer of SRL. If anything, this supports an inference that Mr Stevenson was under her direction in that capacity.

97    Which in turn raises the question of who Ms Murray’s true employer was. Her contract of employment as Chief Operating Officer at least makes provision for this; it specified that she was to report to the Managing Director/CEO. From September 2023, that was Mr Patarica.

98    Mr Patarica, in turn, gives evidence which does not say to whom he reported. But his contract of employment did specify that the Board was to review his performance annually (cl 12) and the description of his duties in Schedule 2 of the contract indicates that, unsurprisingly, as CEO and Managing Director he was to work in conjunction with the Board and ensure that the Board was properly informed. ‘Board’ is defined to mean the board of directors of SRL (as the named employer in the contract), and that is what it must have meant in fact, as SRL did indeed have a board of directors, while the only director of Coburn was Mr Patarica himself. So, following the chain of control leads, if anywhere, to the Board of SRL (not of Coburn) as likely having ultimate control over the activities of Employees, directly or indirectly.

99    For these reasons, the matter of control provides little support for the Commonwealth’s case.

Terms of the employment agreements

100    This concerns a short but important point. Where it is alleged that a person entered into a contract as agent for an undisclosed principal:

The terms of the contract may, expressly or by implication, exclude the principal’s right to sue, and his liability to be sued. The contract itself, or the circumstances surrounding the contract, may show that the agent is the true and only principal.

Siu Yin Kwan at 207.

101    The Receivers submit, and I accept, that the provision set out at [72] above engages this principle. A clause permitting SRL to assign or transfer the employment contract to a subsidiary, including the named subsidiary Coburn, is inconsistent with the proposition that SRL is entering into the contract as agent for Coburn. This indicates that SRL was the ‘true and only principal’.

102    As I have said, that provision appeared in most, but not all, of the employment contracts for the Employees. But setting aside the division between Perth Employees and Site Employees (the provision appeared in the contracts of both kinds of Employees), the Commonwealth did not submit that Coburn should be treated as the true employer of some Employees but not others. The presence of this term in most of the employment contracts is a powerful indication that SRL was not entering into any of them as agent for Coburn.

103    Senior counsel for the Commonwealth’s response to this point was to submit that the contractual right of SRL to give directions that an Employee will work elsewhere within the group does not convey, expressly or implicitly, that SRL was contracting solely as principal. Coburn as principal could equally have wished to reserve to itself the ability to direct an Employee to work on another project for another entity in the Strandline group. Nor does the fact that the employment contracts name SRL as the employer determine that question; whether that was truly the case is of course the whole question here.

104    It is difficult to see why a subsidiary operating a single project would want to redeploy employees to a different subsidiary operating a different project. But even putting that doubt to one side, the submission does not address the very specific effect of the provision set out at [72] above. There would simply be no need to make provision in the employment contract for the transfer or assignment of that contract to Coburn if the contract was with Coburn as principal in the first place.

Intelligible business objective

105    Further, there is no need to posit agency arrangements to make sense of the place of each of SRL and Coburn in the corporate group.

106    SRL was the head company. It held all the shares in Coburn and all the shares in other subsidiaries. It was listed on the ASX. Whatever its financial woes, it was a substantial entity. Its market capitalisation over the period 2021 to 2024 was as high as $409.3 million in FYE 2022 and was $138.9 million even at the time of the trading halt in October 2023. It was not a shell, interposed between Employees and true employer to shield the latter from liability. It had historically operated a number of businesses or held a number of assets through its subsidiaries. Until the disposal of the Tanzanian assets in August 2024, it was pursuing projects other than the Project with the potential to be developed into operating businesses.

107    It makes sense in that context for the head company to be the employer of the Employees of the corporate group. There is likely to be administrative convenience associated with that arrangement, for example the ability to centralise human resources operations. And SRL has the ability to assign Employees to different subsidiaries or different projects as required. That is reflected in the reassignment clause set out at [70] above. The place of SRL as the head company thus explains its role as the employer. There is an intelligible business objective for that role.

108    It is true that the Receivers have not identified any instances in which reassignment in that way actually occurred. Also, the Commonwealth points out that by the time the Receivers were appointed, there was only one project, the Project, operated by one subsidiary, Coburn, and that it was the sole source of revenue available to pay Employees.

109    However, as set out above, it is not clear that that revenue was indeed the only source for payments to Employees. Further, there is an element of hindsight in the Commonwealth’s case. It places too much emphasis on the position in which the group found itself at the time of the appointment of the Receivers. Historically, the Strandline group had operated in a manner that explained the position of SRL as the employer of all Employees.

110    It is true that, as senior counsel for the Commonwealth pointed out, most of the projects that the Strandline group had pursued historically had been sold or abandoned by 2016. But as late as April 2022, SRL was raising funds to pursue its ‘Tanzanian growth projects’. Even though Mr Brauer conceded that any employees that would have been hired in those projects were likely to be Tanzanian, that does not change the fact that it was objectively sensible and desirable for the Strandline group to retain the structure of hiring employees at the head company level to permit their deployment throughout the group as necessary. For example, Perth Employees might conceivably do work in relation to both the Project and the Tanzanian projects. Also, there were a number of Tanzanian subsidiaries and tenements so, depending on how the projects there were ultimately structured, it may have been desirable to retain the ability to have Tanzanian employees work on different projects (if Tanzanian laws stood in the way of this, there was no evidence adduced of that).

111    Consistently with these aspirations, in the annual report released in September 2023, the hiring of Mr Patarica as CEO was effectively explained, in part, as arising from the group’s plans to unlock its ‘portfolio of assets’: see [18] above.

112    Operational difficulties and losses at the Project were experienced, which led in October 2023 to the suspension of shares from quotation on ASX, and the divestment of the Tanzanian assets in August 2024. It appears that at that time, the Tanzanian projects remained undeveloped tenements. But none of this requires an agency relationship in order to explain the arrangements after that time. Roughly half of the Employees were employed before the trading halt, and over two thirds were employed before the Tanzanian disposition. So the arrangements are readily explicable by the respective places of SRL, Coburn and other subsidiaries in the corporate group, and the history of the operations and arrangements in that group. If they began to make less sense with the contraction of the group’s operations and aspirations, that is just a function of the failure of its businesses. No agency relationship is needed to explain it.

113    It is important to appreciate the role of ‘intelligible business objective’ here. It is not some kind of necessary element, in the absence of which an agency relationship must be found. It is, rather, a tool of analysis which reflects the likelihood that if the role of a putative employer company is not explicable without positing that another company is in fact the employer, then an agency relationship may be inferred. For the reasons given, that inference does not arise here.

Other decided cases

114    While each case will turn on its own facts, it is instructive to look briefly at the situations in other cases where it has been inferred that a company in a group was contracting with employees as agent for another member of the group as undisclosed principal.

115    In Branded Media the putative employer was a subsidiary of the true employer. The putative employer had no bank account, business, assets or income of its own, it did not charge other companies in the group for the provision of employees or services, and the true employer (the holding company) paid all employee entitlements. It can readily be seen why Black J held that the employment of employees by the putative employer had no intelligible business objective so that an agency relationship was needed to make sense of the arrangements. The situation in Mosaic Brands was quite similar to that in Branded Media. The situation in Spitfire/Resilient was also quite similar, save that the employees worked for various companies in the corporate group where the holding company was found to be the true employer.

116    The position in Agrigrain (on which the Commonwealth did not rely) was closer to the position in this case. A subsidiary that ran the operation in which the relevant employee worked was held to be the true employer, with the holding company dealing with only ‘administrative matters’ that were given little weight in the analysis. But in Agrigrain there was no written contract of employment, and there had been admissions at first instance that the subsidiary was the true employer. And the evidence was that the subsidiary ran the relevant operations as a ‘relatively distinct business’. In this case, by contrast, 25 of the 166 Employees worked in the Perth head office and were evidently engaged in a variety of activities, such as capital raisings, dealing with the ASX, fulfilling reporting, compliance and taxation obligations, and dealing with and (for a few people) disposing of the Tanzanian assets. And, no doubt, they performed activities connected with the Project. This does not permit a finding that the Project was operated as a distinct business.

117    In Shepard (Administrator), in the matter of Transtar Linehaul Pty Ltd (Administrators Appointed) [2025] FCA 1663, the sole operating company in a corporate group, Transtar, was held to be the true employer, where the putative employing companies did not conduct any business activities. But the operating company made all decisions about employees, and it was not a subsidiary of the putative employers. Stewart J held (at [23]) that the ‘short point’ was that ‘the other entities in the group operated essentially as divisions of Transtar’s business with little attention paid to separate corporate personality’.

118    The situation of SRL and Coburn in this case is quite different. It can hardly be suggested that SRL was a division of Coburn, and there is no suggestion that the Strandline group operated without regard to separate corporate personality. SRL functioned as one would normally expect a holding company to function in a public listed group. There was a head office in Perth and there were executive and administrative staff based at that office that performed a range of administrative, financial and other functions. There is no reason to think that the Perth Employees were employed by any company other than the employer named on their contracts of employment, namely SRL.

119    For all the reasons given, I would extend that conclusion to the Site Employees as well. While SRL had no revenue producing business of its own, it raised capital and conducted activities required as a result of the group’s increasingly straitened circumstances, including the disposal of the Tanzanian assets. It was entitled to such revenue as Coburn produced, by reason of its 100% shareholding in Coburn and the substantial intercompany loan. It made sense from a business perspective for SRL as the holding company to be the employer of all Employees who worked in the group, even as the prospect that they would work for any operating business other than the Project receded.

120    The situation is thus closer to that in Robinson, which led Mortimer J to conclude as follows (at [176]):

While I accept the evidence suggests Brandmet relied on funds being transferred from other entities to pay its liabilities, including its liabilities to employees, the evidence also demonstrates that it did operate as a company providing corporate and administrative services to companies controlled by Mr Wright, and for a considerable period of time, including when the contract was made, had a number of individuals on its payroll. It had an intelligible business as an administration and services company. A similar point was made by White J in [Golden Plains] at [91]:

It is not uncommon within a corporate group for the employees to be engaged by an entity which is not involved in the ownership of assets or in the group’s trading operations. This may be done for perceived taxation advantages or to distance the group’s assets from claims by workers in respect of unpaid entitlements. When properly implemented, it cannot be said that such an arrangement is a sham in the sense described above. On the contrary, such arrangements are often quite transparent, and the apparent effect is precisely the actual legal effect sought to be achieved by those arrangements.

121    The arrangements described above within the Strandline corporate group were also properly implemented and there is no reason to think that their actual legal effect was any different to their apparent effect.

Conclusion on agency argument

122    I am conscious that all of the matters I have addressed above need to be considered together; it would not be correct to find that each of them is not enough, by itself, to lead to a finding of agency. But even considered all together, I do not infer that SRL contracted with any of the Employees as agent for Coburn as undisclosed principal.

123    As has been said the arrangements considered as a whole were unremarkable ones for a public listed group, where the head company centralised administrative, human resources and financial functions, and was at liberty to allocate capital, revenue and costs, and personnel to its operations or those of its subsidiaries as was appropriate.

124    If one looks at the indicia mentioned in Spitfire (see [36] above), many of them concern control, which I have addressed above. The other indicia all point to SRL as the true employer. It paid the Employees’ remuneration; it had assets from which it could meet Employees’ entitlements, namely the debt owed to it by Coburn; and it had purposes other than to be an employer of record – it was the head company of the group, the listed entity, with all the legal, compliance, administrative and financial purposes that come with that position. For the reasons given at [109]-[111] above, there is little force in the emphasis that the Commonwealth places on the fact that the Project was only one operating during the relevant period.

125    Further, and as has been said, the transfer and assignment provision set out at [72] above defeats the Commonwealth’s submission that SRL was acting as agent for an undisclosed principal.

126    For all the reasons given above, I do not accept that submission.

The conditional benefit argument

127    The alternative argument advanced by the Commonwealth was based on what it described as the ‘conditional benefit principle’. The principle will be described shortly, but at a conceptual level the argument was that since Coburn received benefits from the work of the Employees, it should be held to be liable for their wages and other entitlements. The benefit received by Coburn – the work the Employees did – was said to have been conditional on Coburn meeting obligations to pay the Employees and, presumably, to perform the other obligations of the employer. The ultimate point of this appeared to be that if Coburn was liable to pay those amounts, it should be characterised as the true employer.

128    There are considerable obstacles in the way of success for this argument.

129    First, it is not at all clear that the principle forms part of the law of Australia. There is a 1999 case, Donut King Australia Pty Ltd v Barber [1999] SASC 241, which applies the principle, or something approaching it, which will be discussed below. But in Aust-One Investment Pty Ltd v New World Investments Pty Ltd [2023] NSWCA 22; (2023) 111 NSWLR 39, Mitchelmore JA proceeded on the basis that the principle applied expressly without deciding that it did. Her Honour found that on the facts of the case, the principle did not avail the party seeking to rely on it. Macfarlan JA agreed with Mitchelmore JA in a short concurrence that made it plain that, as the argument failed on the facts, his Honour expressed no view on whether the principle was part of the law of Australia. Only Kirk JA found that the principle should form part of the law of Australia.

130    Second, it is also unclear that the principle applies beyond the law of real property. Kirk JA’s conclusion that the principle can be regarded as part of the common law of Australia was (at [151]) expressly confined to ‘focusing just on its application to land and more specifically to easements’. That was reflected in his Honour’s substantive reasoning, which commenced with a consideration of the rationale for the principle, as an exception to the common law rule that the burden of covenants do not run with the land. It was also reflected in his conclusions at [259]-[273].

131    Third, the Commonwealth referred to no authority for the final step in its argument mentioned above, namely that if the burden of paying the Employees falls on Coburn by operation of the conditional benefit principle, then Coburn is properly characterised as the employer of each Employee for the purposes of Pt 5.6 Div 6 of the Corporations Act (or the employer of each relevant Employee).

132    An employment relationship is inherently contractual: Agrigrain at [32]. The authorities on the conditional benefit principle do not present it as a basis to proceed as though a contractual relationship exists between the party said to be taking the benefit (here, Coburn) and the party said to be owed the corresponding obligation(s) (here, the Employees). The focus tends to be narrower, on identifying whether a particular covenant, the benefit of which a party has taken, is conditional on the party also complying with an obligation found elsewhere in the terms of the relevant transaction.

133    The link of conditionality between one covenant and the other is essential to the operation of the doctrine. That was the basis on which the case in Aust-One failed. None of the authorities deals with a situation where all the covenants in an instrument are found to be conditional on each other, so that the entire contractual relationship is somehow carried over to the new party, as it were, by means of the conditional benefit principle. Let alone that the relationship can then be characterised the same way as the original contractual relationship was, for all purposes. I confess that I am speculating here that this is what the Commonwealth meant, but speculation is all I have, because this step in the argument was not articulated at all.

134    It is not necessary to resolve those doubts, however, in order to determine the conditional benefit argument in this proceeding. That is because there is a gap in the facts which means that – even assuming that the principle is part of the law of Australia, that it applies outside property law, and that it is capable of giving rise to an employment relationship – on its terms it simply does not apply.

135    The gap is this. In each case where the conditional benefit principle has been held to apply, or has been seriously entertained, there has been an act of assignment, transfer, novation or similar passing of the benefit of an earlier transaction to the defendant, and it is that act which forms the basis of the contention that the defendant should also bear burdens arising from the original transaction. That basic step is absent from the Commonwealth’s case here.

136    The clearest modern description of the conditional benefit principle is found in Davies v Jones [2009] EWCA Civ 1164 at [27] where Sir Andrew Morritt C formulated it as follows:

(1)    The benefit and burden must be conferred in or by the same transaction. In the case of benefits and burdens in relation to land it is almost inevitable that the transaction in question will be effected by one or more deeds or other documents.

(2)    The receipt or enjoyment of the benefit must be relevant to the imposition of the burden in the sense that the former must be conditional on or reciprocal to the latter. Whether that requirement is satisfied is a question of construction of the deeds or other documents where the question arises in the case of land or the terms of the transaction, if not reduced to writing, in other cases. In each case it will depend on the express terms of the transaction and any implications to be derived from them.

(3)    The person on whom the burden is alleged to have been imposed must have or have had the opportunity of rejecting or disclaiming the benefit, not merely the right to receive the benefit.

137    In Davies v Jones, the earlier ‘transaction’ was a pair of contracts for the sale of land between Mr Jones and certain counterparties. Relevantly to the current point, the benefit of those contracts was assigned by deed of assignment to an entity called Lidl. The argument Mr Jones ran was that, since Lidl received the benefit of being able to enforce the rights that he had against the counterparties, it was also liable to make a contractual payment of £100,000 to which Mr Jones was entitled under the contracts. This argument failed in the Court of Appeal, which found that in the original transaction, the benefit Lidl had obtained was not in fact conditional upon it observing Mr Jones’s obligations.

138    Another illustration, which Morritt C identified as the origin for the application of the doctrine in modern times, is Halsall v Brizell [1957] Ch 169.

139    The benefit there was the right to use roads and sewers in a property development. That right was conferred on purchasers of lots in the development by a deed of covenant. A century or so after that original transaction, a successor in title to the original transferee of one of the lots still enjoyed the benefit of the roads and sewers, but was not contractually bound to observe the deed of covenant. The then trustees of the deed of covenant sued to enforce an alleged liability to contribute, nevertheless, to the costs of the roads and sewers. Upjohn J held that the right to make use of the roads and sewers was conditional on the liability to contribute to the costs, so the defendant was liable under the conditional benefit principle.

140    Relevantly for the present analysis, the defendant in Halsall was not a person who had merely used the roads and sewers, and so taken a benefit in fact. He (or his deceased estate) was a successor in title to the original covenantor. It is true that Upjohn J based his conclusion, in part, on a finding that the defendants did desire to take the benefit of the deed of covenant. But that intention was not the same thing as simply using the roads and sewers, and so having a benefit in fact. His Lordship characterised the defendants as purporting to exercise a right, from which it followed that the obligation to pay costs on which the right was conditional was enforceable against them. This would make no sense in the context of someone who simply took the benefit of the road, that is, used it in fact.

141    Similarly, in Aust-One, the benefits in question were easements over land where a shopping centre was situated. The burden was an obligation to pay monthly amounts of money to the owners of the land. The easements and the payment obligations were covenants made on the original transfers of the lots. The party said to be liable was a successor in title of the original transferees of the lots that had the benefit of the easements. People who simply took advantage of the easements, for example by walking over the land after leaving the lots, would not by that reason alone be liable. It was the position of the respondents as successors in title of the original transferees of the lots that made them susceptible to the application of the conditional benefit principle.

142    In each case, the principle applies (assuming it applies at all) when a person who is party to a legally effective original transaction assigns, transfers or otherwise conveys to a different person the benefit of the transaction. That is often done by the transfer of property to which the original transaction pertains. The question then becomes whether the enjoyment of the benefit – that is the enjoyment of the rights conferred by the original transaction – is conditional upon the observation of an obligation also arising from the original transaction. If so, the different person who enjoys the benefit must also observe the obligation that is linked in that way. The principle does not apply when a different person simply receives a benefit that arises from the original transaction in fact. Conceivably in some circumstances that situation might raise issues of unjust enrichment, but the Commonwealth does not rely that body of doctrine here.

143    The case articulated by the Commonwealth in its written submissions was notable for the absence of any indication of how it was said that the benefit of the rights conferred on SRL by the contracts of employment had passed to Coburn, so that Coburn became subject to the obligations in those contracts. As best I could tell, the Commonwealth relied on a submission that it should be inferred that from August 2024 the Employees’ contracts had been novated from SRL to Coburn. But this novation case was abandoned at trial.

144    Perhaps in recognition of that, the event on which junior counsel for the Commonwealth relied in oral submission was the cessation of any ‘intelligible business objective’ for SRL to be the employer of the Employees. He identified no transfer, assignment or other conveyance, express or implied. The conditional benefit principle was said to have been engaged when it came about that there was no other operating business. It appeared that this submission was only advanced in relation to certain head office Employees, but given the view I have reached on the Commonwealth’s argument it is not necessary to identify who the affected Employees might be.

145    For the view I have reached is that the Commonwealth’s argument stretches the connection between the conditional benefit principle and this case past its breaking point. The connection was already tenuous, for the three reasons advanced at the beginning of this section. The suggestion appears to be that the mere disappearance of an intelligible business objective to explain why certain Employees were employed by SRL is enough to engage the principle.

146    The suggestion fixes on changes in circumstances: the suspension of shares in SRL from quotation on the ASX in October 2023, and the disposal of the Tanzanian assets in August 2024. On the Commonwealth’s case, these removed any intelligible explanation for Employees to be employed by SRL. It follows, the Commonwealth says, that Coburn took the benefit of the rights under the employment contracts, in such a way that it should also be bound by obligations in the employment contracts, on which the benefits are said to be conditional.

147    For one thing, I have not accepted the premise that there was no intelligible business objective for SRL to be the employer. But in any event, and as explained above, the application of the conditional benefit principle in the way described by the Commonwealth finds no support in the authorities. A mere change in circumstances is not enough. There needed to be a transfer or assignment of some kind.

148    The Commonwealth referred specifically to Donut King as an example of a case where the conditional benefit principle had been engaged as a result of a change in circumstances. There, Donut King Australia Pty Ltd (DKA) was a head franchisor of a retail system, a company called Sequin Close Pty Ltd entered into a master franchise agreement with DKA, and Sequin Close entered into a sub-franchise agreement with the Barbers. DKA subsequently terminated the master franchise agreement with Sequin Close. The Commonwealth submits that Sequin Close dropping out as the intermediary in the franchise relationship meant that the conditional benefit principle applied to the relationship between DKA and the Barbers.

149    But with respect, that is not the correct way to read Donut King. For at [8], Duggan J (Doyle CJ and Debelle J agreeing) made it plain that the Barbers had been advised that Sequin Close’s interest in the sub-franchise agreement with them had been assigned to DKA. That was the plaintiffs’ claim: at [11]. There was a formal notice from DKA to the Barbers that DKA had elected to take the assignment of Sequin Close’s interest in the master franchise agreement: at [20]. The trial judge concluded that the obligations of Sequin Close under that agreement became the responsibility of DKA by reason of the assignment: at [13]. The Full Court upheld that conclusion, with Duggan J’s conclusion at [25] being expressed as follows (emphasis added):

The effect of the sub-franchise agreement is to grant ongoing rights vested in the sub-franchisee to use the name, logos and other insignia of DKA and the DKA system to conduct the franchised operation in consideration of the proper performance by the master franchisor of its obligations. As Megarry V-C observed in [Tito v Waddell (No 2) [1977] 1 Ch 107 at 297]:

... the more closely the obligations are linked to the rights, the easier it will be to construe the instrument as granting merely qualified rights.

If the rights are conditioned in this sense, then the conditions should pass as part of the assignment. In my view this is what occurred in the present case.

150    In this case, as explained above, there was no assignment, transfer or other conveyance of the benefit of the contracts of employment, or of anything to which they might pertain. It is impossible, therefore, to see how the benefit of any relevant covenants passed to Coburn, so that it was also subject to burdensome covenants on which the beneficial ones were conditional. The conditional benefit argument cannot succeed in this proceeding.

Conclusion

151    For the reasons given, the contracts of employment and the weight of the other documentation and circumstances indicate that SRL was the true employer of all the Employees. No inference that it entered into the employment contracts as agent for Coburn as an undisclosed principal arises. The conditional benefit principle, even if it is part of the law of Australia, does not apply in these circumstances.

152    No discretionary reason was advanced as to why the declaration sought by the Receivers ought not be made. There will be a declaration substantially in the terms sought. The Commonwealth should pay the Receivers’ costs of the proceeding, with liberty to apply in case there is some circumstance bearing on that of which the Court is not aware.

Associate:

Dated:    11 August 2026

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